Korab Resources slapped with a ‘please explain’ over $1m loan
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The ASX has questioned the financial position of explorer Korab Resources following a $1 million loan to an unlisted explorer whose board consists of three Korab directors.
The ASX queried Korab over a statement in its Annual Report relating to a $987,603 loan to unlisted private explorer Polymetallica Minerals.
Polymetallic Minerals, formerly Uranium Australia, holds a portfolio of assets including the Wanganoo gold project and Gascoyne Province group of base metal projects in Western Australia and the Batchelor and Green Alligator uranium projects in Northern Territory.
Three of Korab’s directors — Andrej Karpinski, Daniel Smetana and Rodney Skeet — are also on the board of Polymetallica.
Mr Karpinski tried to sue Korab shareholders a few years back over allegedly defamatory comments made in emails, letters and on the HotCopper investor forum.
Loan ‘fully recoverable’
Korab directors told auditors they believed the loan was fully recoverable.
However, the auditors said they were unable to form an opinion because they were unable to get their hands on sufficient evidence regarding the fair value of Polymetallica’s areas of interest or ability to raise further capital.
Korab told the ASX it had provided auditors some of the information they required relating to the Polymetallica loan.
The company was also satisfied Polymetallica would be able to repay the loan on the basis that three of its directors were on the Polymetallica board.
On the subject of its financial condition, Korab told the ASX matters raised by auditors in the annual report had nothing to do with the state of its financial position.
“The loan to Polymetallica is a non-current third party receivable and is not repayable prior to 30 September 2018,” Korab said.
“As a consequence, this receivable does not affect Korab’s current assets or liabilities or Korab’s ability to continue as a going concern.”
Financial condition likely to improve
Indeed, Korba told the ASX that it believes financial results from its operations and its general financial condition is likely to improve as it progresses its exploration and development assets.
Korab is currently developing its Winchester magnesium carbonate deposit where it secured $6 million funding last year from Chinese investors for its development.
The company is still tinkering away at agreements regarding this investment.
Korab also owns the Geolsec phosphate quarry near Winchester as well as the mothballed Bobrikovo gold and silver mine in eastern Ukraine.
It also owns the Bachelor cobalt and gold project near Darwin and the Mt Elephant / Ashburton Downs gold and copper project near Paraburdoo in Western Australia.
The company recently completed a partially underwritten rights issue, a convertible loan conversion and a looking at securing additional financings.
Shares in Korab took a tumble today, down 7 per cent to 2.7c at the final bell.
As at the end of June, Korab had cash in bank of around $300,000 and market cap of around $8 million.